Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) and a Moroccan bank of agriculture, Credit Agricole Du Maroc (CAM) have signed a memorandum of understanding (MOU) to promote inclusive growth and sustainable development.
Aliyu Abdulhameed, managing director/CEO of NIRSAL, and MTariq Sijilmassi, chairman, management board of Credit Agricole Du Maroc (CAM), signed the MOU, committing to the mutual prospecting and implementation of agriculture-oriented projects that benefit both organisations and their countries. The deal has rekindled their six-year partnership and is set to facilitate finance and investment, trade and support systems across agricultural value chains, with emphasis on smallholder farmers.
Among the short and medium-term undertakings outlined by the agreement, is that NIRSAL and CAM will work towards presenting a common front to the managers of the Land Degradation Neutrality (LDN) Fund in a bid to attract global finance for sustainable agribusiness investments.
Financial integration
“CAM’s deep experience in developing solutions for the financial integration of smallholder farmers in Africa would also benefit NIRSAL in opening up more pathways for critical finance to enter the agricultural primary production sub-sector in Nigeria.”
At the MOU signing event, Abdulhameed highlighted NIRSAL’s areas of need to include the development of financing products that suit the seasonality of agriculture and other farming contexts, emphasizing the difficulties smallholders experience in keeping to the terms of conventional bank financing products.
Abdulhameed expressed confidence that innovative financing products that speak to the peculiarities of agricultural primary production would help agriculture financiers to maximise the benefits and incentives in the 75% Credit Risk Guarantee (CRG) issued by NIRSAL for primary production projects, as well as Interest Drawbacks (IDB) of up to 40% that diligent borrowers can enjoy.
“Leveraging NIRSAL’s CRG facility, commercial lenders in Nigeria have injected over N152.8 billion into the agriculture sector in the last six years, with credit crystallization rate still below 1%,” he stated.
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